Tsingtao to reduce costs

Tsingtao Brewery Co Ltd, China's second-largest beer maker, said yesterday it will focus on reducing costs to maintain its profit margin as there is little room to raise product prices as market growth slows.

Tsingtao in April posted an 18 percent slide in 2007 second-half earnings as strong sales failed to offset higher tax rates and barley prices.

"Our focus will be on cost reduction," Chairman Jin Zhi Guo, told reporters. "We will make some adjustments in prices of our premium brands, but I can tell you the extent will not be large."

AMRO said Tsingtao's average barley price could increase this year by 50 percent in China, the largest beer market by volume in the world.

JV to tap mainland market

Japanese trading firm Itochu Corp and bakery Shikishima Baking Co said they have agreed to form a joint venture with Taiwan's Wei-Chuan Foods Corp to enter the mainland's bread market.

Itochu, Japan's fourth-biggest trading house, and unlisted Shikishima, Japan's second- largest bakery and owner of the Pasco brand, said in a joint statement that the venture will build a bread factory and begin wholesale operations by February 2010, initially targeting wealthy consumers in Shanghai.

That will be a step further than Japan's top bakery, Yamazaki Baking Co, which bakes bread at its retail shops on the mainland.

Chi-Med H1 sales bounce

Hutchison China MediTech (Chi-Med) said half-year sales at its main healthcare unit grew at almost twice the industry rate though group losses widened as it came closer to completing trials on two key drugs.

Shares of Chi-Med, a unit of Hong Kong-listed conglomerate Hutchison Whampoa Ltd and a pharmaceuticals maker that uses traditional Chinese medicines, rose 7 percent to 120 pence in razor-thin volume at 0734 GMT. Six-month group losses for the period ended in June widened to $6.4 million from $5.6 million a year ago, it said in a statement.

Asustek Q2 net down

Taiwan's Asustek Computer, the world's top PC-motherboard maker, said yesterday that its second-quarter net profits fell 18 percent, but forecasted strong growth for its laptops heading into the back-to-school and holiday seasons.

Asustek expected third-quarter mainstream notebook shipments to rise 25-50 percent from the second quarter to 1.5-1.8 million units.

Shipment of its popular low-cost Eee PCs would grow to 1.5-1.8 million units from 1 million over the same period, according to a company statement.

It added that overall third-quarter sales should rise about 30 percent sequentially.

Motorola's $431m deals

Motorola Inc said yesterday it won multiple network expansion orders worth $431 million from the world's top mobile operator, China Mobile, in the first half of 2008.

The company, which plans to spin off its mobile-device business next year, said that about 50 percent of the revenue from these contracts was recognized in the first half.

The latest contract follows a $394 million contract over the same period last year, the company said.

Fubon to set up mainland JV

Taiwan's Fubon Financial has found a mainland securities house to invest in and will apply for regulatory permission for the deal once Taiwan and the mainland sign an memorandum of understanding on the sector.

Chairman Daniel Tsai said such an investment will give Fubon Financial, Taiwan's fifth-largest financial holding firm, up to a 30 percent stake in a mainland partner and access to underwriting business. Fubon Bank (Hong Kong), said in June it will pay 230 million yuan ($33.2 million) for nearly a fifth of Xiamen Commercial Bank.

Reuters

(HK Edition 08/07/2008 page2)